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-t1 meeting of the Federal Reserve Board was held in the office of the

Federal Reserve Board on Tuesday, February 9, 1926 at 11:10 a.m.

Feb

The

PRESENT: Vice Governor PlattMr. HamlinMr. TallerMr. JamesMr. Cunningham

1.1r. Eddy, SecretaryMr. McClelland, Asst. Secretary

minutes of the meetings of the Federal Reserve Board held on

rY 5th and 6th were read and approved.

Report of Committee on Salaries and Expenditures on letter dated

Febrizary 5th from the Comptroller of the Currency, recommending approval of

an-increase from „;3,000 to ,;0,300 per annum in the salary of National Bank

3,xarri.'lner W. W. Kane, Jr.; the Committee also recommending approval.

Approved.

Report of Committee on Salaries and Expenditures on letter dated

Febr11,-17Y 9th from the Comptroller of the Currency recommending approval of

a sal arY Of .3600 per annum for National Bank '-",xaminer 0. A. Anderson, to

be n .-ssirmed to the 9th Federal Reserve District; the Committee also recom-

Illencling approval.

Approved.

Report of Committ .e on Salaries and Expenditures on letter dated

FebraarY 4th from the Chairman of the Federal Reserve Bank of Kansas City,

/lequestinP; aoproval of the action of the _,]xecdtive Committee of that bank

111 increasing the salary of Mr. A. B. Hewitt, Field Agent, from ,;3300 to

per annum, effective February 1st; the Committee also recommending

4PProval,

Approved..

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Report of Committee on Examinations on letter dated February 5th from

the Federal Reserve Agent at Cleveland, recommending approval of application

Of the Guardian 2rust Company, Cleveland, Ohio, for permission to establish

abranch at the southwest corner of St. Clair Avenue and sarkwood Drive;

the Committee also recommending approval,.

Approved.

Letter dated February 2nd from the Chairman of the Federal Reserve

Ba Of San Francisco, with further reference to his letter of January 6th

°Ilegesting the elimination from the Federal ..teserve _Let of that provision

CI requires the Chairman of a Federal Reserve Bank to make public the

tar,- Of nominating banks in elections of Class A and 3 directors; the

°hal

tilat44 the recent election of a Class 3 director of that bank two member

ham-in Ores,on and two in Washington nominated Ar. R. H. Cox, and fifteen

14 011egon and ten in Washington nominated Mr. italph P. Merritt, but that

thp.ualloting three in Oregon and three in Washington voted for Mr.

Zerrltt while nine in Oregon and seven in Washington voted for Mr. Cox.

pointing out, as an indication that nominating banks are approached,

After discussion, the Law Committee was requested •to report to the Board as to the advisability of theamendment suggested by Mr. Perrin.

Report of Committee on District 7 dated February 5th, with referenceto t,

4e Committee's investigation in connection with the proposal of the

''ral -J.:lose -rye Bank of Chicago to erect a building to house its Detroit

-cht as follows:

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2/9/26. -3-

"Pursuant to a Resolution adopted by the Federal Reserve

Board directing the Committee on the Seventh Federal Reserve

District to investigate conditions and the needs and necessities

Of a building in which to house the Detroit Branch of the Federal

Reserve Bank of Chicago, the Committee visited Detroit on

February 1st, 1926.After a preliminary conference with the committee represent-

ing the Federal deserve Bank of Chicago, consisting of r. Heath,

overnor LcDougal and Director Crapo, and Directors Inglis and Staley

and ijanaging Director Cation of the Detroit Branch, your committee

proceeded to investigate the Branch Bank of that city and noted the

present set-up and conditions under which this branch functions,

which are as follows:1st. The main office and work rooms occupy three floors

of the Congress Building in Detroit, which have a floor space of

approximately 15,410 square feet.

2nd. The Federal Reserve Agent's Department is located

in the 7:ayne County and Home Savings Bank. There is a separate

vault space in this bank alloted to the Detroit Branch of the

Federal Reserve Bank of Chicago, and one small room occupied by

three people in which the records and all business of this de-

partment is transacted. This annex is located approximately three

blocks from the main office.3rd. The Cash Department of the Branch is located in the

First National Bank Building in the city of Detroit. It has for

its own use two cages on the main floor and a working space on

the Eighth Floor of said bank building. The space on the Eighth

Floor appeared to be very inadequate for the needs of this depart-

ment. This annex is located approximately three and one half

blocks from the main office.Your committee was impressed with the fact that all avail-

able soace alloted to the branch in the various buildings hereto-

fore mentioned, was fully utilized. This branch could vary con-

veniently use more space than it now occupies.

At a conference -later in the day in which all committees

Participated, the necessity and advisability of erecting a suit-

able building for housing the Federal Reserve Branch at Detroit

was fully considered both from the standpoint of erecting a build-

in?; on the lot now owned by the bank, and also from the standpoint

Of an exchange of the lot now owned by the bank for one equally

stitable and probably of less value.

In the opinion of your committee, the proposition to ex-

change, as outlined by the Detroit committee, offered no advantages,

as the total cost of the property offered in exchange would incur

as great an investment for a building site as would the one now

owned by the bank and the location would not be as desirable."

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"At this meeting the Detroit committee and the committeerepresenting the Federal Reserve Bank of Chicago, passed aresolution recommending the present site owned by the bank as themost suitable one on which to erect a building for the needs ofthis branch; in this recommendation, your committee concurs.

The committees of the Federal Reserve Bank of Chicagoand of the Detroit Branch were of the opinion that the statutoryallowance of Two Hundred and Fifty Thousand Dollars (.A50,000)would not be sufficient for the erection of a suitable buildingto serve the needs of the Detroit Branch, therefore, it would benecessary for them to ask the consent of Congress to erect a suit-able building for its needs; the total cost of vhich, your committeehas been assured, will be submitted to the Federal Reserve Boardfor its approval in the very near future.

In view of the conditions existing at the Detroit Branchand the importance that attaches to this city and the nineteencounties served by this Branch, your committee would recommendthe erection of a suitable bank buildinr; to serve the needs ofthis Branch of the Federal Reserve Bank of Chicago; the cost ofsame to be determined by the Federal Reserve Board when the proposi-tion is submitted to them."

Upon motion, it was voted to accept and approvethe above report.

Letter dated February 3rd from the Chairman of the International Acceptance

4a01,advising of the intention of that institution to organize an affiliated

company to transact certain business of a 'kind not undertaken by the bank

Upon motion, it was voted to refer the abovematter to the Law Committee for advice as to whetherany action by the Board is required.

Liemorandum from Counsel dated February 6th, with reference to the appli-

of Messrs. J. 1. Carr, Cecil B. DeCille and D. LI. Dorman, for permissionto e,"70 at the same time as directors of the Bank of America and the Commercial

I „NVZ A -

44Celes Branch of the Bank of Italy; the Board having recently granted

Trust and Savings Bank, both of Los Angeles, and as officers of the

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t-5-

the applicants permission to serve the Bank of America and the Commercial

Ilational Bank, which has since changed its name to the Commercial ITational

Trust and Savings Bank; the Law Committee concurring in the recommendation

°f Counsel that the Bank of Italy Branch and the Commercial 1Tational Trust

alcui Savings Bank are in substantial competition, and that the applications

be refused as to the Bank of Italy.

U-non motion, it was voted to approve the

above recommendation.

Memorandum from Counsel on letter dated January 19th from the Chairman

Of the Federal Reserve Bank of St. Louis, with reference to local attorneys

el11910Yed by that bank in connection with collection suits broacht against the

l'ecleral Reserve Bank in Little Rock and in St. Louis, and stating it is their

Izzaerstanding that in future such appointments should be subject to the ap-

DI'oval of the Federal Reserve Board; Counsel in his memorandum expressing

tile ()Pinion that an attorney employed to represent a Federal Reserve Bank

ill a particular collection suit or for the handling of any single case may

b° employed or compensated by the Federal Reserve bank without securing the

4131)1.°7a1 of the Board.

After discussion, Mr. Miller moved that for the

purpose of administering that provision of Section 4

of the Federal Reserve Act which reads - "Ally compensa-

tion that may be provided by hoards of directors of

Federal Reserve banks for directors, officers or employees

shall be subject to the approval of the Federal Reserve

Board", the Board rule, in answer to the question raised

in connection with the letter from the Federal Reserve

Bank of St. Louis, that compensation paid to an attorney

employed by a Federal Reserve bank in the prosecution of

a suit or otherwise be held to be compensation requir-

ing the approval of the Federal Reserve Board.

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Carried, Messrs. Platt and Hamlin voting "no".

Mr. Miller then moved that the above action be referred

to the Committee oa Salaries and Expenditures with the re-

quest that the Committee submit to the Board a practical

method of procedure to be followed in the matter referred

to.Carried.

llemorandum from Counsel on the matter referred to him at the meeting on

44110.17 26th,

Neral Reserve

l'ecleral Reserve

it for its

1) Pederal -.:;eserve banks to member banks on their collateral notes under

Seetioa 13

namely, letter dated January 23rd from the Governor of the

Bank of Minneapolis, with reference to the authority of one

bank to rediscount with another promissory notes discounted

member banks; Counsel expressing the opinion that loans made

o2 the Federal Reserve Act may properly be rediscounted by other

l'edLeral Reserve banks, in accordance with Section 11 (b).

Approved.

In this connection the Secretary pointed out that

Counsel had not referred to the suggestion contained

in the above letter from the Governor of the Federal

Reserve Bank of Minneapolis that Section 11 be amended

so as to permit one Federal Reserve bank to discount for

another its awn note collateraled by eligible paper,

government securities or member bank notes collateraled

by eligible paper or government securities.

Upon motion, the Law Committee was requested .

to report to the Board on the advisability of this

suggested amendment.

21ftorandum from Counsel dated February 4th, with reference to letter

klteaJanuary 30th from the Governor of the Federal Reserve Ban

k of Boston,

l'CLI;Lesting a ruling as to the eligibility for rediscount at a Federal Reserve

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boiia as factors' paper of notes of a warehouse company secured by notes of

it8 austomers against advances made by the company to its customers on butter,

eges and poultry stored in the company's own warehouse; Counsel expressing the

t°1107ing conclusions and submitting draft of letter to the Governor of the

Peciaral

01'

Reserve Bank of Boston advising accordingly:

(1) Notes of customers of a cold storage warehouse

company then endorsed by the company are eligible

for rediscount in the hands of a member bank, if the

proceeds have been used for an agricultural or com-

mercial purpose and the notes comply in other respects

with the law and the Board's Regulations.

(2) If the company is in reality a factor, the notes

of the company issued in its capacity as factor for

the purpose of making advances exclusively to producers

of eggs and poultry or other staple agricultural products

in their raw state are eligible for rediscount when

complying with all other relevant requirenents.

(3) Butter can not be properly considered a staple agri-

cultural product in its raw state within the meaning of

the Federal Reserve Act or the Board's Regulations.

After discussion, lir. Hamlin moved approval of

the conclusions reached by Counsel in his memorandum

and of the proposed letter to the Governor of the

Federal Reserve Bank of Boston, with the exception

that Counsel be requested to consider further, after

consultation with the Department of Agriculture, the

question of whether butter may properly be considered

a staple agricultural product in its raw state, and

that the Governor of the Boston bank be invited to

submit further cornent on this matter.

% Carried.

Dl'aft of reply to letter dated January 14th from the Deputy Commissioner

41:1 of the 3tate of :ichigan, with reference to the granting of trust

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l'"ers to national banks in that state; the proposed reply advising of the

t)/31411°n Of the Board that it is authorized to grant to any national bank

1004U:4. in the State of Michigan and having a capital equal to or greater

t4m.,the capital required for the organization of state barlcs in the place

12117444 it is located, the right to act as executor, administrator, guardian

or sates and committee of estatesof lunatics.

Upon motion, the proposed reply wasapproved*

Memoranim dated January 5th from the Chief Examiner, submitting and

°ettiellting an report of examination of the First National Corporation of

NIt°1111 made as at the close of business June 19, 1925*

Ordered circulated.

Report of Examination of the Federal Reserve Bank of San Francisco

44:1 its branahes, made as at the close of business July 11, 1925*

Referred to the Committee on Examinationsand Committee on District 412.

Ths Vice Governor then referred to several telegrams reporting theClotu

4 Of small non-member state banks, and following discussion, Mr.

8tati5ties to

to aepositors

r m.overi

'd. en County, Marion, Arkansas for membership in the Federal Reserve

8hteraQ4,1c1 for sixty shares of stock in the Federal Reserve Bank of St. Louis,

that the Vice Governor direct the Division of Research and

prepare for the Board a full report with respect to losses

in connection with failed banks throughout the country.

Carried.

Report of Committee on Examination on application of the Bank of '

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this being the new institution organized to succeed The Crittenden County

the admission of which was discussed with the Board by the Federal

serve Agent at 3t. Louis at the meeting on February 1st; the Committee

'scolamending approval of the application, subject to the conditions contained

tlie Board's Regulation H and to the following additional conditions:

(1) You shall agree not to pay any dividend until youhave a suriAus of v10,000.00, and thereafter Prior tothe payment of a dividend you shall carry to surplusaccount not less than one-tenth part of your net profitsfor the preceding divIdend period until your surplusfund shall amount to twenty per cent of your capitalstock.

(2) That responsible parties shall guarantee in writing

the collection of at least one hundred thousand dollars(A00,000.00) from stock assessment on stockholders ofthe Crittenden County Bank, to be used in eliminatingundesirable assets taken over from it by the Bank ofCrittenden County.

Upon motion, it was voted to approve theabove application, :,Ir. Cunningham voting "no".

IRTS 07 ST=IITG ITTES :

h•ted.,

Dated

.te

batea,

February

February

February 9th,

February 9th,

5th, - ecommending changes in stock6th, as set forth in the Auxiliary8th, Approved.9th, Recommending action

powers as set forththis date.

Approved.Recommending actionpowers as set forththis date.

-Refused.Recommending actionpowers as set forthof this date.

Ordered held.

at Federal Reserve Banks,Minute Book of this date.

on applications for fiduciary

in the Auxiliary Minute Book of

on application for fiduciaryin the Auxiliary :iinute Book of

on application for fiduciaryin the Auxiliary Minute Book

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Q3 OP STANDING- COMITTEES: (Conttd)

324ated• February 9th, Recommending action on application for admission ofstate bank, subject to the conditions stated in theindividual reports attached. to the application, asset forth in the Auxiliary 2.1ircute Book of this date.

Approved..l'atod• February 5th, Recommending approval of the application of Ilr• Vim.

Abbott Phillips for permission to serve at the =lietime as director of the Chemical National Bank, NewYork City and as member of a firm of Private Bankersof Dillon, Read. and. Company, New York City.

Approved..

The meeting adjourned at 12:35 p.m.

Vice—Governor.

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